What Will Happen with the Housing Market in 2023?
As we enter another year of uncertainty for the housing market, there’s one big question on everyone’s minds right now: will the 2023 housing market follow the same trajectory, or will it start to heat up again?
In today’s market, the most powerful tool you have to beat your competition is knowledge.
So, let’s take a deep dive into the latest housing market projections for 2023 so you have the knowledge and confidence to educate your clients and crush your goals this year.
2023 Housing Market Projections
The past year has been full of volatility and misleading information about what’s happening or what’s going to happen in real estate. Beginning the year with the same momentum seen in the prior two, inflation led to a fast and unexpected cooldown fueled by the largest and fastest rise in mortgage rates ever seen.
Taking all of that into consideration, here’s what industry experts anticipate for the 2023 housing market.
Will Home Prices Go Up or Down?
In the past 12 months, there’s been a lot of mixed information about what will happen with home prices in the near future. Homes are staying on the market longer. We’re not seeing a large influx of new listings, suggesting we’re returning back to the seasonal norms we typically see this time of year. Plus, the newest data shows an uptick in price drops for current listings in the later half of 2022.
So, what does the future hold for home prices? Will home prices fall?
With some major industry players calling for appreciation and others projecting depreciation, this is what we can gather: the reality will probably lie somewhere in the middle. For most markets around the country, we can expect to see neutral growth.
Current projections average out at .1%. However, it’s always important to note that projections have a tendency to change throughout the year. The best way for you to educate your clients on this is by checking in often on both your local and national data to give them the full picture of what to expect.
What’s Going to Happen with Mortgage Rates?
In case you didn’t know, the past year saw the largest and fastest rise in mortgage rates ever.
So, if you have clients who are waiting for those rates to go back down to where they were at the start of 2022, they may be waiting a very long time.
While most experts agree that they believe the peak is over, what happens with mortgage rates is directly impacted by one huge factor affecting the economy right now: inflation.
As people ask you about what will happen going forward, the answer is to just keep an eye on what’s happening with inflation.
Want a deeper dive into the mortgage rate forecast? Download our free 2023 Housing Market Forecast eGuide.
What Will Happen with Home Sales in 2023?
Last year saw the lowest amount of homes sold in nearly a decade. Total sales for 2022, including both existing and new construction were projected to end at around 5.8 million homes.
So, what are experts anticipating for home sales in 2023 so far? With interest rates slowly but surely dropping yet still high, current home sale projections for this year are 5.1 million.
However, there is a silver lining to this projection. Because home sales are mortgage rates are directly linked, there are many factors that lead industry experts to anticipate a rise in homes for sale.
According to Lawrence Yun, Chief Economist for NAR,
“The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November.”
The other important factor to remember is that while the initial projection is less than last year, we don’t know what the final number will actually be. Since experts tend to re-project throughout the year and there are many different factors impacting the market right now that could change, like inflation, it’s possible to see that initial home sales forecast number rise throughout the year.
Will the Housing Market Crash This Year?
With the rapid shift that’s happened in real estate in the last 12 months, some people are raising concerns that we’re destined for a repeat of the crash we saw in 2008. But in truth, there are many reasons why today’s housing market is nothing like 15 years ago.
One of the biggest reasons this isn’t like the last time is the number of foreclosures in the market is much lower now.
While you may have seen recent stories about the number of foreclosures rising today, context is important.
During the pandemic, many homeowners facing financial difficulties were able to pause their mortgage payments using the forbearance program.
When the forbearance program ended last year, fear that a wave of foreclosures would hit the market also fed rumors that a housing crash was on the horizon.
The reality is in the graph above: while there are more foreclosures now compared to during the pandemic (when foreclosures were paused), the number is still well below what the housing market has seen in a more typical year, like 2017-2019. And most importantly, the number we’re seeing now is still far below the number we saw during the market crash (shown in the red bars in the graph).
There are many more reasons why we shouldn’t expect a housing crash in 2023, so download our Market Forecast eGuide for a more in-depth look to help clear up any confusion with your clients.
What Does this Mean for Buyers & Sellers for 2023?
The 2022 market underwent a major shift as economic uncertainty and higher mortgage rates reduced buyer demand, slowed the pace of home sales, and moderated home prices. But what about 2023?
With experts projecting a rise in inventory and a decline in mortgage rates so long as inflation continues to ease, experts suggest we’re heading for a more stable and predictable market than we’ve seen in the last few years.
There is still a lot of motivation for buyers and sellers in the market, and that’s not expected to change in the next year.
If we’ve learned anything in the past couple of years, it’s that while we can project the future, we can’t predict it.
While industry experts don’t expect the 2023 housing market to be as volatile as 2022, current projections are based on the current economic status of the country.
With that likely to change as the year progresses, we are also likely to see projections adjust along with it. Ultimately, your most important role in 2023 is to be the educated agent, and we have the perfect eGuide to help you do that.
With a combination of data, insights and an action plan, our free 2023 Housing Market Forecast is the perfect tool to help you start the year off right.
Download it today.